The Bank of England’s agents have explicitly named agriculture as a sector experiencing ‘elevated financial stress’, alongside hospitality, retail and construction, signalling that farm business fragility is now on the banks’ radar.
‘There is so far more concern over food inflation than for most other goods due to higher energy, transport and agricultural costs,’ the latest summary says.
NFU Deputy President Paul Tompkins said that the report will not come as a surprise for farmers and growers: “For some time, we have been seeing higher electricity, fuel and fertiliser costs adding further strain to already stretched farm budgets.
”We know rural households are also stretched, facing higher fuel bills, higher travel costs and fewer affordable alternatives when prices rise.
“This is something that needs to be taken very seriously – farmers and growers can’t absorb additional increases in costs.”
NFU Deputy President Paul Tompkins
“Now this report is suggesting that food price inflation is expected to reach 6-7% through the year due to rising costs, yet farmers are unlikely to see much of that return.
“This is something that needs to be taken very seriously – farmers and growers can’t absorb additional increases in costs. We will continue to work with government at the highest level on what it can do to support the sector at this challenging time.”
Food prices a ‘major concern’
As shipments struggle to pass through the Strait of Hormuz, higher energy prices are expected to feed through to fertiliser and agri-chemical costs in the coming months, adding further pressure to input cost budgets at a difficult time.
The banks’ agents have said that the conflict has ‘eroded confidence and dampened prior expectations for a modest pickup in real activity in 2026’.
The report also flags that rural households face particular exposure to rising energy and transport costs. It adds: ‘Household participants continue to feel pressure from rising prices, with food prices a major concern.’
“It is also important we have regular conversations with banks, which play an important role in providing lending opportunities and working capital for UK farmers and growers,” NFU Deputy President Paul Tompkins added.
The Bank of England regularly publishes a summary of business conditions based on intelligence gathered from its agents.
